Truly great madness cannot be achieved without significant intelligence.
The madness in the market can never be explained. Of course, we always find reasons to coincide with our views. As if the woes in the market and the economy are not enough we now have individuals who could drive the most sane crazy. We are referring to Bernard Madoff, a former Nasdaq chairman who is now infamous for one of the largest swindle in Wall Street. A giant Ponzi scheme was in play where he took investments from clients, spend the money on himself, gave around little to look good and repaid clients out of other clients' accounts.
That's the real world if you please. Let's get back to our markets where the bulls may have regained some lost ground in the last couple of days. It remains to be seen whether the current momentum can be sustained, as the bulls still lack conviction.
For the day, we expect the market to open flat to weak. Global markets are mixed with no clear direction.
US markets fell amid worries about the automakers, questions about the Madoff scandal and anticipation of Tuesday's rate-cut decision from the Fed.
Meanwhile, back home, the advance tax numbers for a few top companies are out and as usual it’s a mixed bag. For now though, one may have to deal with lots of volatility in a narrow band. Investors should remain cautious. Fresh buying should be avoided. The market needs fresh impetus to move forward.
Among the major bulk deals, Credit Suisse sold over 0.5mn shares of Greenply Industries at an average price of Rs38. Goldman Sachs purchased over 6mn shares of IFCI at an average price of Rs23. Citigroup offloaded 2mn shares of S Kumars at an average price of Rs24.
The Dow Jones lost 0.8%. The Standard & Poor's 500 index fell 1.3%, and the Nasdaq composite slid 2.1%.
Investors are also focused on the automakers since the Bush administration said last week that it might offer General Motors (GM, Fortune 500) and Chrysler bridge loans from the $700 billion bailout fund Congress set aside for Wall Street.
The Fed's policy-setting committee is meeting to discuss interest rates, with a decision due at late this evening. The central bank is widely expected to cut the fed funds rate by at least a half-percentage point to 0.5%.
The New York Empire State index, a regional manufacturing report, slipped to minus 25.8 in December from minus 25.4 in the previous month.
The Federal Reserve reported capacity utilization was 75.4% for November, down from a revised 76% in the previous month. Another report showed that homebuilders' confidence stayed at an all-time low in December due to the weak economy.
The dollar fell to an 8-week low versus the euro and hovered near a 13-year low against the yen.
US light crude oil for January delivery fell $1.77 to settle at $44.51. It hit a high as $50.05 in the morning.
Expectations are that OPEC will lower output when it meets in Algeria this week.
COMEX gold for February delivery gained $16 to settle at $836.50 an ounce.
A highly volatile session ended with smart gains as bulls managed to extend gains on Monday. The smart upswing was led by the realty, metals and oil & gas stocks. Also the broader indices were in demand, the mid-cap and the small-cap indices added over 3.5% each.
Finally, the BSE benchmark Sensex ended at 9,832 adding 142 points and the NSE Nifty index ended 2,981 adding 60 points.
Market breath was positive, 1,921 stocks advanced against 569 declines, while, 80 stocks remained unchanged.
Among the BSE Sectoral indices, barring the BSE IT index all the other major indices ended with gains. The BSE Realty index led from the front, up 5.5%. Even the Mid-Cap and the Small-Cap indices added over 3.5% each.
Gitanjali Gems rallied over 7% to Rs73 after the company announced that the Board of Directors of the Company would meet on December 19, 2008, to consider the proposal of buy back of equity shares of the Company. The scrip touched an intra-day high of Rs78 and a low of Rs69 and recorded volumes of over 4,00,000 shares on BSE.
Shares of ICICI Bank surged by over 2% to Rs418 after the company announced that it may lower its interest rates over the next two to three weeks, stated reports. The scrip touched an intra-day high of Rs434 and a low of Rs413 and recorded volumes of over 24,00,000 shares on BSE.
Kamat Hotels’ gained by over 5% to Rs44 after 4.8% of equity changed hands in a single transaction. The scrip touched an intra-day high of Rs46.5 and a low of Rs42 and recorded volumes of over 6,00,000 shares on BSE.
Shares of Nava Bharat Ventures advanced by 2% to Rs125 after the company announced that it approved the buyback of equity shares from the existing shareholders from the open market; price cap has been pegged at Rs170 a share. The scrip touched an intra-day high of Rs131 and a low of Rs119 and recorded volumes of over 1,00,000 shares on BSE.
Hindustan Zinc announced that it has further reduced the price of zinc by 1.7%.The price of zinc was lowered to Rs63,700 per metric ton. Lead prices were kept unchanged at Rs70,500 per ton.
The stock ended at Rs332 up by 2.5%. The scrip touched an intra-day high of Rs335 and a low of Rs325 and recorded volumes of over 28,000 shares on BSE.
With the FOMC meet and the IIP and manufacturing data to be released, market players back home would keep a close track of the events unfolding in the US. So, remain guarded even though the ongoing rally may prompt traders to reckon that the worst is near an end.